Does your insurance cover that homegrown marijuana?

Tuesday

Rosemary Diskin, who rents out a townhouse, became suspicious when her tenants repeatedly made excuses to keep her out.

“They never wanted me there,” Diskin said.

Apprehensive, she scheduled and attended a rental-property inspection, ultimately finding a makeshift room built in the basement filled with marijuana plants, lights and humidifiers.

“The whole thing was full of steam,” she said. “I was very upset.”

The displeasure, however, was not because Diskin is necessarily opposed to recreational marijuana -- first legalized by Massachusetts voters in 2016 -- but because she’s worried her home insurance policy will not cover any claims stemming from an illegal substance under federal law.

“If my place is going to be full of mold, or if they burn it down, will my insurance pay for something that’s federally illegal?” she asked.

Diskin’s question echoes the concerns of many homeowners, landlords and insurers across the commonwealth and in other parts of the country where recreational marijuana is now legal.

And answers are in short supply.

“It depends. If you wait and ask again in five minutes, the answer would probably change,” quipped Tom Rogers, senior vice president and owner of FBinsure LLC, an insurance agency based in Taunton.

Indeed, the discrepancy between state and federal law is putting the insurance industry on edge and giving little comfort to property owners.

On the commercial side, a handful of insurers are taking a leap of faith and underwriting insurance policies for property owners with tenants who run marijuana-related businesses. But there’s more hesitancy on the residential side.

Most home insurance policies include “exclusionary language” related to controlled substances, meaning a claim could be denied if a controlled substance was somehow involved.

“If someone is growing 12 plants and their house catches on fire, the insurance company could deny coverage all together, saying this is a controlled substance and there’s an exclusion,” Rogers said. “Whether it’s likely they would or not is another story.”

In advance of his interview with Wicked Local, Rogers and FBinsure reached out to a handful of insurance carriers -- which Rogers asked not to be named in the story -- to ask how the issue was being handled.

In one case, extension cords servicing a marijuana grow operation started a fire in a rented property. The insurer covered the claim, but Rogers said it could have easily denied it, as the activity is technically illegal under federal law.

A couple other carriers hadn’t yet handled claims, but were internally discussing coverage options. Another hadn’t even thought about it, Rogers said.

“My sense is that insurance companies are going to give a lot more thought to how they’re going to handle this,” Roger said.

The judicial system could help provide some guidance, as is often the case in insurance claims. But because the recreational marijuana market is still so new, case law and precedent is scant.

“At some point, a denied claim is going to be challenged in court and then we’ll have better guidelines,” Rogers said.

In one case, the Washington Court of Appeals in 2010 ruled in favor of an unknowing landlord whose property was damaged with mold due to a then-illegal marijuana growing operation. Recreational marijuana is now legal in Washington.

“We conclude the tenants’ acts constitute vandalism, for which there is coverage,” the court ruled.

The decision may give some comfort to landlords, but some insurance policies have since written policies to specifically preclude any similar events.

The dynamic largely puts the onus on property owners to decide whether growing marijuana at home, or allowing tenants to grow in rented apartments, is worth the risk. For Diskin, her tenants’ lease is up in the Salem townhouse, so she has told them it will not be renewed unless the grow is completely removed.

She also plans to add language to all of her lease agreements, as she owns and rents four other properties, strictly prohibiting marijuana cultivation inside her properties.

“I don’t want to lose my insurance,” Diskin said.

Under state law, landlords are allowed to prohibit the “display, production, processing, manufacturing or sale of marijuana or marijuana accessories on or in the property that the landlord owns,” according to regulations established by the Mass. Cannabis Control Commission. For landlords who want to prohibit home growing operations, however, it may not be an imminent option, especially for those amid year-long or multi-year lease agreements that don’t already include specific language.

As for insurers, more answers on the issue will likely take time.

“There’s not a lot of black and white to this issue. It’s a very much gray area and it’s going to remain that way for a while,” Rogers said.

Eli Sherman is an investigative and in-depth reporter at Wicked Local and GateHouse Media. Email him at esherman@wickedlocal.com, or follow him on Twitter @Eli_Sherman.